Howard Stephenson: After Court's ruling, is Congress' taxing power now unlimited?

Like virtually every other court watcher, I was flabbergasted by Chief Justice John Roberts' opinion upholding Obamacare. Federal control of health insurance will accelerate the cost of health care, but more troubling is the expansive, perhaps even limitless authority Roberts' opinion confers on Congress.

For more than a century, Congress and the Supreme Court have battled over how far Congress' power under the "Commerce Clause" extends. Prior to 1937, the Supreme Court limited Congress' regulatory authority to clear examples of "interstate" commerce, so Congress' ability to regulate commerce that was exclusive to a single state was limited.

Following the infamous "switch in time that saved nine," the Supreme Court defined interstate commerce to include wheat grown on a small family farm and entirely consumed on the farm. The Court argued that if the farmer hadn't grown his own wheat, he would have had to purchase wheat elsewhere and that wheat might have travelled among the states. So if something might be bought and sold across state lines, the Supreme Court held that Congress had the authority to regulate it.

While those decisions opened vast authority for Congress, until Obamacare, Congress had never tried to create commercial activity so they could regulate it. Obamacare's "individual mandate" requires virtually all Americans to purchase health insurance. ("Virtually" means that low-income Americans receive insurance from Medicaid or Medicare.) If a person refuses to purchase insurance, Obamacare imposes a monetary penalty, charitably titled a "shared responsibility payment," that is payable to the IRS.

The Individual Mandate forces even young healthy individuals to purchase insurance, or make the shared responsibility payment. Since they are the least likely consumers of health care, including them in the risk pool may make it possible for insurers to pay for applicants with pre-existing conditions. (Obamacare's other big innovation requires insurance companies to cover all applicants.)

Constitutionally, the insurance mandate tests the limits of Congress' authority, in this case to create and then regulate interstate commerce. While many academics assumed the Supreme Court would easily uphold the individual mandate under the Commerce Clause, the oral arguments over Obamacare suggested otherwise.

When the decision came out last month, Roberts led a sharply divided Court in ruling that the individual mandate was unconstitutional under the Commerce Clause but constitutional under Congress' broader taxing authority. Roberts, along with Justices Scalia, Kennedy, Thomas and Alito, agreed that interstate commerce must exist before Congress can regulate it.

However, Roberts and Justices Ginsburg, Sotomayor, Breyer and Kagan ruled that the Shared Responsibility Payment can be understood as a tax imposed on Americans who choose not to purchase health insurance. So construed, Roberts argued, the individual mandate is a constitutional use of Congress' taxing power.

"Although the breadth of Congress's power to tax is greater than its power to regulate commerce," Roberts wrote, "the taxing power does not give Congress the same degree of control over individual behavior." Color me skeptical. Roberts' chilling opinion permits Congress to regulate all kinds of individual behavior through the taxing power.

Roberts argued that Congress can create commerce, as long as the penalty for failing to participate doesn't cost as much as the commercial transaction would have. Although this case didn't touch on the limits of Congress' authority to prohibit behavior under the taxing power, Roberts' opinion suggests no reason why Congress couldn't use a similar mechanism.

For example, Congress might use its taxing authority to prohibit developers from using less energy efficient designs in their buildings. By most accounts, the Commerce Clause does not justify this requirement, but Roberts would presumably uphold that requirement, if the penalty for using insufficiently energy efficient designs is paid to the IRS, no other criminal sanctions would apply, and the penalty isn't too high. (Who knows what too high might be?)

In the short term, the Supreme Court's Obamacare decision suggests serious problems. Congress' taxing power can now extend into authorities previously reserved exclusively to the states. However, Supreme Court jurisprudence is full of tests articulated in one case, only to be abandoned very quickly. Roberts' expansion of the taxing power may also be temporary.

Roberts' opinion suggests another possible means of reining in both Obamacare and Congress' authority under the taxing power. Article I Section 7 of the Constitution requires that "all bills for raising revenue" must originate in the House of Representatives. Obamacare began its legislative journey in the Senate, which means its passage may have violated the Constitution. However, the Supreme Court has not ruled on whether Obamacare should have originated in the House.

Howard Stephenson is a Utah State Senator. He represents District 11, including Draper.